Kaupthing analyst Matthew McEachran said the soaring cost of fuel and road tax could start affecting visits to out-of-town retail parks. Conversely, he argued that online and home shopping specialists such as Asos, N Brown and Findel could benefit.
Stocks in both the general and food retail sectors fell again as poor ONS numbers and a disappointing performance from John Lewis – which reported sales down 1.8 per cent against a weak comparative from last year – set a gloomy tone. “It continues to be tough out there – which, frankly, given the tone of overall consumer newsflow, is hardly surprising,” said Investec analyst David Jeary.
It was another week of horror for the quoted sofa specialists. Land of Leather fell to new lows amid reports of concerns about its ability to renegotiate its debt covenants with its banks. Rival ScS was the second-biggest faller and trading remains dire in the sector.
However, some retailers bucked the trend. Mothercare reported barnstorming full-year results (see opposite), while Burberry also produced a strong set of prelims. Pre-tax profits soared 25 per cent to£196 million on underlying sales up 18 per cent to just shy of£1 billion.
Laura Ashley reported a 7.6 per cent fall in like-for-like sales in its first quarter, but total sales were up 7.9 per cent. The company’s stakebuilding in Moss Bros was cited as the reason for Baugur walking away from its mooted bid for the men’s outfitter this week.
Woolworths confirmed that it is considering its options for its 2entertain joint venture with the BBC. Shore Capital analyst John Stevenson upgraded the shares from sell to hold, saying a sale could raise up to£200 million for Woolworths. However, he cautioned: “We still struggle to see a positive outcome for shareholders over the medium- to long-term.”
JJB Sports confirmed its acquisition of 22-store footwear business Qube from Sir Tom Hunter’s West Coast Capital for a nominal£1. Qube made a£6.1 million loss in the year to January 2007.
Blacks was due to report full-year numbers as Retail Week went to press. Landsbanki analyst Mark Photiades forecast pre-tax profit of just below£1 billion, adding that new boss Neil Gillis’s work on stores and cost reduction was beginning to bear fruit.